1999 (4) TMI 195 - AT - Central Excise

Annual capacity of production - Redetermination of due to change in value of d (nominal centre distance)

Summary

Issues: Determination of annual capacity of production based on Notification 33/97 and Notification 45/97, request for change in value of 'd', Commissioner's decision on artificial reduction in value of 'd', non-supply of technical expert reports, contravention of principles of natural justice.

Analysis:
1. Determination of Annual Capacity of Production: The case involved three appellants operating as Hot re-rolling mills manufacturing hot re-rolled products of non-alloy steel under CET sub-heading 7214.90. The dispute arose with the issuance of Notification 33/97 and Notification 45/97, requiring the payment of Central Excise duty effective from 1-9-1997 based on the capacity of the re-rolling mills as determined by the formula in the Hot Re-rolling Mills Annual Capacity Determination Rules, 1997. The annual production capacities of the appellants were calculated using the prescribed formula from the notifications.

2. Request for Change in Value of 'd': The appellants requested a change in the value of 'd' (nominal center distance) which was granted under the condition that the change should occur in the presence of Central Excise officers. However, the request for re-fixation of annual production capacity based on the altered parameters was rejected, and the original capacity determination was upheld. This led to appeals and subsequent orders by the Tribunal setting aside the initial determinations and remanding the matters to the Commissioner of Central Excise for further consideration.

3. Commissioner's Decision on Artificial Reduction in Value of 'd': The Commissioner held that the reduction in the value of 'd' was artificial and did not impact actual production significantly. It was argued that the use of a wobbler as a device to connect unequal parts did not alter the effective value of 'd'. The Commissioner relied on a technical report by Shri G.D. Srivastava, emphasizing the importance of the Center to Center distance of rollers in determining actual production. The appellants contested the non-supply of these technical reports, claiming a violation of natural justice principles.

4. Non-Supply of Technical Expert Reports and Natural Justice: The Tribunal acknowledged the significance of the technical report by Shri G.D. Srivastava in the Commissioner's decision and agreed with the appellants that they were entitled to access this report. The failure to provide the report before determining the annual capacity contravened principles of natural justice. Consequently, the impugned order was set aside, and the matter was remanded to the Commissioner for fresh adjudication after providing the appellants with a copy of the technical report and an opportunity to present their defense.

In conclusion, the Tribunal allowed the appeals by way of remand, emphasizing the importance of procedural fairness and the right of the appellants to access and respond to technical expert reports influencing the determination of their annual production capacities.